Some cryptocurrency users store their funds in exchanges. Some of them do not know the hazards of keeping their cryptocurrencies in these exchange wallets. In this article we will discuss types of wallets in details and the better wallets for you to keep your coins.
Differences in Wallets
Mainly there are two types of Wallets:
Hot wallets are those that are connected to the internet. These are relatively less secure than the cold wallets and are called software wallets because of this.
Cold wallets do not have connection to the internet because they store the coins offline. They are the safest form of wallets that you can use to store your cryptocurrencies.
There are several types of hardware and software wallets. These are:
- Desktop Wallet / Mobile Wallet
Desktop or mobile wallets are most secure form of software wallet. You can store your crypto and you have full control over it using these type of wallets. They give you access to the private keys, so they are the best wallets to store your coins if you cannot afford hardware wallets.
- Exchange Wallet / Online Wallets
Exchange wallets and Online Wallets also allow you to store your coins on their site but you are not in full control of the funds. If the exchange wallet goes offline, the coins cannot be accessed.
- Hardware Wallets
Hardware wallets are physical devices. They come in the form of tangible objects rather than software. You connect your devices to the computer to connect the internet (Just like the USB device).
- Paper Wallets
Another type of cold wallet is the Paper wallet which is basically a physical piece of paper. This paper contains all the data which you need to access your cryptocurrency.
Which is Safer To Use in Storing tokens?
The best approach is to use both the software and the hardware wallets. If you have hardware wallet then you should store the coins which you are holding for long term in that wallet. In other words, cold wallets are for funds you won’t need in a long time while desktop and mobile wallets work well for funds you need to access regularly.
When you store your coins or tokens in exchanges, the risks are higher. Cyber thieves sometimes hack exchanges. Exchanges can also shut down due to unforeseen issues or even become exit scams. People lose funds when such incidents happen. Do not use an exchange wallet as your primary wallet. Remember, if it is not your keys, it is not your crypto.